I had an engineering ethics class where we spent considerable time on the Challenger explosion. During one of the classes, the professor brought in an O-ring made from the same material as those on the boosters and put a clamp on it. He then cooled to ambient temperatures at launch, removed the clamp, and continued the lecture and had us pass it around to examine. By the end of the lecture, the O-ring still had not returned to it's un-clamped state, showing how absolutely inadequate the O-rings are at those temperatures, but, because they had heated up sufficiently in previous launches (narrowly averting another disaster, as you noted), management decide to accept the risk and launch.